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Who died and left the US $7B?

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Re: Who died and left the US $7B?

#381

Post by Fin_Code »

eli wrote: post #355
_bin_ wrote: post #162

Earlier quoted context omitted.

This is something people love to rage about, yet it's not one with an obvious fix. The counterpoint is that this leaves money invested, which means others invest in other things, and still entails interest payments. It exists in part because you don't want someone who inherited his parents' house and wants to move in to go broke trying to pay taxes, or have to re-mortgage it, with an even stronger case with family fa…

These are just generic anti-tax arguments. Yes, if you pay your taxes you will have less money. And maybe you would have used some of that money to do good things. Oh well. I don't think anyone is seriously suggesting you shouldn't be allowed to borrow against assets. That isn't even the problem. The problem is that you can go your whole life without paying taxes on gains of those assets, then pass them on to your he…

Yep step up in basis reform. Thats actually on the table under Kamala.

Re: Who died and left the US $7B?

#382

Post by [deleted] »

kjkjadksj wrote: post #284
pdonis wrote: post #272

Earlier quoted context omitted.

You have it backwards. The actual question is, how did the majority magically get the power to enforce its will on the minority in the first place?

The majority held this power as long as we’ve been a social species. Even a Pharaoh lives with consent of the majority even if they’ve convinced that majority they are divine.

[deleted]

Re: Who died and left the US $7B?

#383

Post by briffle »

_bin_ wrote: post #162
Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

This is something people love to rage about, yet it's not one with an obvious fix. The counterpoint is that this leaves money invested, which means others invest in other things, and still entails interest payments. It exists in part because you don't want someone who inherited his parents' house and wants to move in to go broke trying to pay taxes, or have to re-mortgage it, with an even stronger case with family fa…

There are literal mansions on dozens of acres (with landscaping, ponds, etc) 3 miles from me that have a lower property tax than my 2000sq foot suburban home. They were purchased by a trust in the 80s or early 90's, and now the kids (or grandkids) live in it. My state limits how much property tax can be raised on a home until its sold, and then that number resets.

It drives me a bit crazy..

Re: Who died and left the US $7B?

#384

Post by skizm »

Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

I was under the impression that the estate has to pay the debts before the assets are disbursed, and the step-up basis occurs, thus collecting all appropriate taxes, just deferred until after death. This reddit post says the opposite is true. I cannot find the answer via Google. Does anyone know the order of operations?

If the step-up basis occurs first, the fix here seems very obvious, but I assume ultra-wealth people have lobbied to keep that from changing?

Re: Who died and left the US $7B?

#386

Post by eadmund »

_bin_ wrote: post #162
Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

This is something people love to rage about, yet it's not one with an obvious fix. The counterpoint is that this leaves money invested, which means others invest in other things, and still entails interest payments. It exists in part because you don't want someone who inherited his parents' house and wants to move in to go broke trying to pay taxes, or have to re-mortgage it, with an even stronger case with family fa…

> This is something people love to rage about, yet it's not one with an obvious fix.

Removing the step-up in basis seems like an obvious fix. Record the basis at the time of transfer, then charge taxes when or if it is sold. Adjust for inflation if that seems reasonable.

Is there anything wrong with this? It doesn’t require selling on receipt.

Re: Who died and left the US $7B?

#387

Post by Slava_Propanei »

SR2Z wrote: post #358
lazide wrote: post #326

Earlier quoted context omitted.

Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?

Boo. That's not what's at stake here; people don't wanna pay taxes that are fairly owed to the government.

The asset has not moved outside the family, has not been sold, no profit on sale has been realized.

You think a profit transfer has been made, because you think in terms of atomized individuals with no family.

Re: Who died and left the US $7B?

#388

Post by freejazz »

HeyLaughingBoy wrote: post #343
dh2022 wrote: post #143

Earlier quoted context omitted.

Billionaires flaunt their wealth via yachts, mansions, space rockets and super-PACs. Which to me seems way more fun than getting your name on a tax list…

That's not flaunting it; that's just buying things you like because you have the money. Flaunting would definitely be getting your name on a list that you don't need to be on.

Gigantic luxury yachts of ever-increasing lengths are absolutely flaunting.

> Flaunting would definitely be getting your name on a list that you don't need to be on.

Oh, like a list of the largest yachts and their owners?

Re: Who died and left the US $7B?

#389

Post by mindslight »

skizm wrote: post #384
Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

I was under the impression that the estate has to pay the debts before the assets are disbursed, and the step-up basis occurs, thus collecting all appropriate taxes, just deferred until after death. This reddit post says the opposite is true. I cannot find the answer via Google. Does anyone know the order of operations? If the step-up basis occurs first, the fix here seems very obvious, but I assume ultra-wealth peop…

The asset value minus the debt (both on the date of death [0]) is what contributes to estate tax liability on the 706 form [1]. Then going forward, the asset basis is stepped up to what it was on the date of death (for both the estate entity and downstream beneficiaries), based on the idea the asset has already been taxed by the estate tax. This assumption falls apart when there isn't much value left in the asset-minus-loan that counts for estate tax, because most of the value had already been realized and spent during the decedent's lifetime.

[0] ignoring the "alternative valuation" option

[1] at least per my "decoupled" year 1999 understanding. And no, that doesn't mean my experience is from 1999.

Re: Who died and left the US $7B?

#390

Post by mmcdermott »

jncfhnb wrote: post #331
bluGill wrote: post #282

Earlier quoted context omitted.

The state of nature is it is your property so long as you can protect it. There are lots of different ways to do that. Many animals have concepts of owned territory which they protect in various ways.

And you principally protect your property by… wait for it… paying taxes to the state to uphold law and order

While I'm sure that someone somewhere objects to paying for law and order, I think most tax grumbling comes from taxes rising (and, arguably, still not rising enough) to pay for bigger and bigger programs with an increasingly tenuous relationship to law or order. Not everyone objects to every line item, of course, but the bigger the budget gets the more certain it becomes that those rising taxes are not just to keep up with inflation on basic essentials.
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